Australian Tax Obligations for Bali Property Owners

Key Facts

• Australian tax residents must declare worldwide income to the ATO — including Bali rental income
• The Australia-Indonesia Double Tax Treaty (1992) prevents double taxation
• FIRB does NOT apply to property purchases outside Australia
• Capital Gains Tax applies when you sell — no main residence exemption for overseas property

Rental Income

Indonesian Tax

Rental income earned in Indonesia is subject to Indonesian withholding tax:

• Tax residents: 10% final tax on gross rental income
• Non-residents: 20% final tax on gross rental income

Most foreign property owners are classified as non-residents unless they hold a KITAS and meet residency criteria.

Australian Tax (ATO)

You must include your Bali rental income in your Australian tax return:

1. Convert IDR rental income to AUD (use ATO exchange rate for the period)
2. Report as foreign rental income
3. Claim allowable deductions (management fees, maintenance, depreciation, travel to inspect)
4. Claim a Foreign Income Tax Offset (FITO) for Indonesian tax already paid

The FITO prevents double taxation — you get a credit for Indonesian tax paid, reducing your Australian tax liability. Under the Double Tax Treaty, the offset is generally the full amount of Indonesian tax.

Capital Gains Tax (CGT)

When you sell your Bali property:

• The gain is assessable in Australia
• No main residence exemption for overseas property (even if you live there)
• 50% CGT discount available if held for 12+ months
• Indonesian tax on the sale can be claimed as a FITO
• Calculate gain in AUD — use the exchange rate at purchase and sale dates

Double Tax Treaty (1992)

The Australia-Indonesia Tax Treaty ensures you're not taxed twice on the same income. Key provisions:

• Rental income: Can be taxed in both countries, but Australia grants a credit for Indonesian tax paid
• Capital gains on property: Can be taxed in Indonesia; Australia grants a credit
• Business profits: Taxed where the business has a permanent establishment

FIRB — Not Applicable

The Foreign Investment Review Board (FIRB) regulates foreign purchases of Australian property. It does not apply to Australians buying property overseas. You do not need FIRB approval to buy in Bali.

Record Keeping

Keep records for at least 5 years after disposal of the property:

• Purchase and sale contracts
• All rental income received (with exchange rates used)
• Indonesian tax receipts/certificates
• Expense receipts (management, maintenance, travel)
• Depreciation schedule
• Bank statements showing transfers

Recommended: Get Professional Advice

Tax law is complex and the interaction between Australian and Indonesian tax systems requires specialist knowledge. We recommend working with an Australian accountant who has experience with overseas investment property. Many of our clients use accountants who specialise in expat and overseas property tax.